LANSING – If the Legislature and Michigan voters approve a constitutional amendment changing the way property taxes are assessed, homeowners will see relief but it will be at the expense of services provided by local units of government, municipal officials said Friday.
Bill Anderson, legislative liaison for the Michigan Townships Association, said his preliminary estimates of the measure, which received unanimous support in the House this week, will reduce revenue for schools and local units of government by $100 million in its first year of implementation.
That’s on top of the 4 percent decline in property tax collections municipalities expect this year, he noted.
Anderson said home sales are still being evaluated by local officials through the end of the month, so figures are not finalized, but residential property tax values are declining while agricultural property values are increasing.
So far no official fiscal analysis has been released by the House Fiscal Agency or the Department of Treasury as the measure was not part of a committee meeting and was discharged to the floor before the chamber voted.
Passage of the joint resolution, which the leader of the Senate said will be taken up next week, received criticism by municipal officials.
“I see no reality in terms of (caring about) the revenue impact,” Anderson said.
Summer Minnick, director of state affairs for the Michigan Municipal League, said it was “irresponsible” for the House to act without public discussion on the measure.
She said lawmakers were “catering to a populist idea without any analysis.” She also said regular citizens wouldn’t understand the measure’s effect on local government services like police and firefighters if people who work on this issue in Lansing still have questions about the proposal.
Tricia Kinley, director of tax policy and economic development for the Michigan Chamber of Commerce, said the measure is “certainly the right thing to do” for property owners.
Kinley argued former Attorney General Frank Kelley erred in his 1996 opinion regarding a portion of the school finance reform measure Proposal A, and correcting the property tax issue has long been a Chamber priority. In Kelley’s decision, he ruled one of the four statutory methods of calculating the taxable value of a property could lead to excessive cuts and was therefore unconstitutional.
That decision revolved around a provision which generates the taxable value by multiplying the preceding year’s value by the percent increase in the State Equalized Value (SEV). In years following a sharp increase in a property’s value, the formula could force the taxable value below what the Constitution’s uniformity requirements lay out, he said.
At the time of the decision, the state deputy treasurer for local government predicted that could save money for municipalities because a decline in the property value wouldn’t necessarily equate to a drop in a property’s taxable value.
Lawmakers listening to homeowners paying more for their property taxes at a time when they see their home values taking a nosedive partially led to the action by the House.
But local government officials say the legislation will put a “super cap” on their revenue by limiting it to the property value’s increase (so if a home’s value went up by 1 percent, that’s how much the assessment could increase) and freezing the assessment if a home’s value decreases in a given year.
The current law already caps property tax increases by 5 percent or the rate of inflation, whichever is less.
Anderson noted that some legislative changes have already benefited homeowners, such as using a one-year sales study instead of three years.
Tom Hickson, director of legislative affairs for the Michigan Association of Counties, said local officials understand people are hurting in the tough economic times the state is experiencing, but a proposal that would reduce local revenue without making it up somehow would be a concern to his members.
This story was provided by Gongwer News Service. To subscribe, click on Gongwer.Com
a>>
